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Regressive Effects and Countermeasures of individual income tax deferred pension insurance

Journal of Chinese Tax and Policy

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Title Regressive Effects and Countermeasures of individual income tax deferred pension insurance
 
Creator WU, XIANGYOU
 
Description In order to reduce the society¡¯s dependence on the first pillar of endowmentinsurance and improve its flexibility, it is imperative for China to develop personalpension insurance. Deferring individual income tax is a type of tax incentive that canstimulate middle and high income earners to participate in personal pension insurance,but it also creates the regressive effect of income reverse regulation, because middleand high income earners can enjoy a larger decline in current period¡¯s tax rate, moretax exemptions for capital gains, and greater gap between inter-period tax rates .Regressive effects originate from the regressive tax system in relation to personalincome tax, this tax system¡¯s design can be optimised such that its incentive functioncan be taken advantage of, while its regressive effect is suppressed. By shifting part ofthe retirement responsibility to middle and high income earners¡¯ themselves, thegovernment can concentrate its financial resources on providing elderly support to lowincome earners, thereby making these individuals the real beneficiaries of theindividual income tax deferral preferential policy. The first pillar of the social securitysystem is to seek fairness, while the third pillar is to pursue efficiency. The presence ofregressive effect of individual income tax deferral should be accepted by society aslong as it can be controlled within a tolerable extent.
 
Publisher Journal of Chinese Tax and Policy
 
Contributor —
 
Date 2018-05-22
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
—
 
Identifier https://openjournals.library.sydney.edu.au/index.php/JCTP/article/view/12731
 
Source Journal of Chinese Tax and Policy; Vol 3, No 2 (2013): Chinese Tax and Policy 5
1839-065X
2205-2550
 
Language EN
 
Rights Copyright (c) 2018 XIANGYOU WU